Supportive Legal Framework

Georgia’s official state motto — “wisdom, justice and moderation”– befits a state having a sophisticated and predictable legal regime supporting one of the world’s leading business centers. Unlike the majority of U.S. states, Georgia has fully codified its contract law. A number of the world’s largest corporations govern their transactions and affairs according to Georgia law. Georgia’s federal and state courts enjoy a well-deserved reputation for independence, honesty and transparency. Courts in Georgia rigorously enforce arbitration agreements and awards.

Arbitration-Friendly Courts

In the United States, international arbitration is governed primarily by the Federal Arbitration Act (“FAA”), which embodies a strong national policy in favor of the resolution of disputes by arbitration. The Eleventh Circuit U.S. Court of Appeals, which is based in Atlanta, has a consistent track record of applying the FAA in a manner that is most friendly to international arbitration. Indeed, a case can be made that the Eleventh Circuit is the most international arbitration-friendly court in the United States and among the most arbitration-friendly courts in the world, as illustrated by the following:

To date, the Eleventh Circuit is one of only a few U.S. federal circuits to completely exclude “manifest disregard for the law” as a viable ground for vacating arbitral awards. Frazier v. CitiFinancial Corporation, 604 F.3d 1313 (11th Cir. 2010). This sets Georgia apart from a number of other leading arbitral venues in the U.S., including New York.

The Eleventh Circuit has held that an international arbitration award issued from an arbitral seat in the U.S. may be vacated only on the grounds set forth in Article V of the U.N. Convention on the Recognition and Enforcement of Foreign Arbitral Awards (the “New York Convention”). Industrial Risk Insurers v. M.A.N. Gutenhoffnungsbutte, 141 F.3d 1434 (l1th Cir. 1998). The Eleventh Circuit is the only federal circuit in the United States to eliminate domestic arbitration law as a basis for vacating international arbitration awards.

The Eleventh Circuit interprets the New York Convention’s defenses for a party seeking to avoid the enforcement of an international arbitration agreement narrowly to include only “standard breach of contract defenses which can be applied neutrally on an international scale.” See Singh v. Carnival Corp., 2013 U.S. App. LEXIS 22012, n. 5 (11th Cir. 2013). Consistent with that approach, the Eleventh Circuit was the first U.S. judicial circuit to hold that the public policy defense set forth in Article V of the Convention is available only at the “award-enforcement stage;” it cannot be interposed at the “arbitration-enforcement stage” of court proceedings, when a district court is considering an action or motion to compel or stay an arbitration. See Lindo v. NCL (Bahamas), Ltd., 652 F. 3d 1257 (11th Cir. 2011).

The Eleventh Circuit follows a liberal approach with respect to allowing arbitrators to determine arbitrability (that is, whether the dispute is properly submitted to arbitration). For instance, in Terminix International Co. LP v. Palmer Ranch Ltd., 432 F.3d 1327 (11th Cir. 2005), the court held that “[b]y incorporating the AAA Rules … into their agreement, the parties clearly and unmistakably agreed that the arbitrator should decide whether the arbitration clause is valid.”

The Eleventh Circuit holds that domestic law exclusions with respect to matters that may be subject to arbitration are trumped by the New York Convention. Bautista v. Star Cruises, 396 F. 3d 1289 (11th Cir. 2005).

Recognizing that “[a]rbitration’s allure is dependent upon the arbitrator being the last decision maker in all but the most unusual cases,” the Eleventh Circuit does not hesitate to impose sanctions to deter baseless contests of arbitration awards. World Business Paradise, Inc. v. Suntrust Bank, 403 Fed.Appx. 468 (11th Cir., 2010). Courts in the Eleventh Circuit follow the fundamental principle that the judiciary must “ensure arbitration is an alternative to litigation, not an additional layer in a protracted contest.” B.L. Harbert Intternational v. Hercules Steel Co., 441 F.3d 905, 913-14 (11th Cir. 2006), overruled on other grounds,Hall StreetAssociates LLC v. Mattel, 552 U.S. 576 (2008).

Lower instance courts follow the Eleventh Circuit’s lead. As stated in the recent decision of a first instance court ordering parties to arbitrate in London, “the importance of international comity and ensuring predictability and orderliness in international commerce warrant the enforcement of international agreements to arbitrate, even in contexts where a similar agreement would be unenforceable in the domestic context.” Goshawk Dedicated Ltd. v. Portsmouth Settlement Co. I, Inc., 466 F. Supp.2d 1293 (N.D. Ga. 2006).

Most matters relating to international arbitration are handled in federal courts. Any judicial proceeding falling under the New York Convention may be filed in federal court. If a party chooses to initiate a state court action relating to an arbitration agreement or award falling under the New York Convention, Section 205 of the FAA provides that the respondent(s) may remove the case to federal court. In the event that option is not exercised, the state courts (which are among the best funded in the country, with judicial pay in the top quintile of states) also have a strong track record of arbitration-friendly rulings. See, e.g., Triad Health Mgmt. of Ga., III, LLC v. Johnson, 298 Ga. App. 204 (2009) (upholding pre-dispute arbitration agreements in medical malpractice cases); Greene v. Hundley, 266 Ga. 592 (1996) (holding that “a reviewing court is prohibited from weighing the evidence submitted before the arbitrator, regardless of whether the court believes there to be sufficient evidence, or even any evidence, to support the award”).

A Positive Legislative Framework

In 1988, Georgia became one of the first jurisdictions in the world to enact substantial portions of the 1985 United Nations Commission on International Trade Law (UNCITRAL) Model Law on International Commercial Arbitration. The legislation was introduced by a state senator named Nathan Deal. Senator Deal became the Governor of the State of Georgia in 2011. In 2012, Georgia also adopted most of the 2006 amendments to the UNCITRAL Model Law (excluding certain controversial provisions in those amendments authorizing arbitrators to issue ex parte interim relief). The 2012 legislation, which became effective upon signature by Governor Deal on May 2, 2012, also incorporates a number of non-UNCITRAL Model Law provisions representing international best practice, including, for instance, a provision allowing non-Georgia parties to opt out of certain grounds for judicial review of an award.

Free Choice of Counsel and Arbitrator

Georgia is one of only a small handful of U.S. states that expressly permit parties to select counsel and arbitrators of their choice in arbitration proceedings, including attorneys not licensed in any U.S. jurisdiction. Ga. R. Prof. Conduct 5.5(e)(3). In addition, non-U.S. lawyers may represent their clients on a pro hac vice basis in the state’s superior courts (for instance, in judicial proceedings ancillary to the arbitration). Uniform Superior Court Rules of the State of Ga., Rule 4.4.